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. 2006 Apr;41(2):467-85.
doi: 10.1111/j.1475-6773.2005.00497.x.

The effect of rural hospital closures on community economic health

George M Holmes  1 , Rebecca T Slifkin, Randy K Randolph, Stephanie Poley
Affiliations

The effect of rural hospital closures on community economic health

George M Holmes et al. Health Serv Res. 2006 Apr.

Abstract

Objective: To examine the effect of rural hospital closures on the local economy.

Data sources: U.S. Census Bureau, OSCAR, Medicare Cost Reports, and surveys of individuals knowledgeable about local hospital closures.

Study design: Economic data at the county level for 1990-2000 were combined with information on hospital closures. The study sample was restricted to rural counties experiencing a closure during the sample period. Longitudinal regression methods were used to estimate the effect of hospital closure on per-capita income, unemployment rate, and other community economic measures. Models included both leading and lagged closure terms allowing a preclosure economic downturn as well as time for the closure to be fully realized by the community.

Data collection: Information on closures was collected by contacting every state hospital association, reconciling information gathered with that contained in the American Hospital Association file and OIG reports.

Principal findings: Results indicate that the closure of the sole hospital in the community reduces per-capita income by 703 dollars (p<0.05) or 4 percent (p<0.05) and increases the unemployment rate by 1.6 percentage points (p<0.01). Closures in communities with alternative sources of hospital care had no long-term economic impact, although income decreased for 2 years following the closure.

Conclusions: The local economic effects of a hospital closure should be considered when regulations that affect hospitals' financial well-being are designed or changed.

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Figures

Figure 1
Figure 1
Mean per Capita Income and Time Trend, by County Type
See this image and copyright information in PMC

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